Agencies Extend Comment Period for Third-Party Risk Management Guidance

According to Federal Reserve Press Releases, the Federal Deposit Insurance Corporation, the Federal Reserve Board, the National Credit Union Administration, and the Office of the Comptroller of the Currency jointly announced an extension of the comment period for proposed guidance concerning the management of risks linked to third-party relationships until December 16. The initial deadline for comments on this proposal was November 16.

The proposed guidance is stated to incorporate the agencies' supervisory experience and lessons derived from reviewing how financial institutions manage their third-party risk practices. The objective of the guidance is to assist banks and credit unions in customizing their risk management approaches to suit the risks associated with specific third-party relationships. Furthermore, the proposed guidance adopts a principles-based methodology and, like all supervisory guidance, is not binding.

Upon finalization, the federal bank regulatory agencies intend to replace current third-party risk management guidance with the finalized version to foster consistency and sensible innovation within the banking sector. The National Credit Union Administration also intends to rescind its current third-party risk management guidance and will perform its own evaluations to update relevant guidance as necessary.

Separately, the Federal Reserve Board announced on the same day that it is extending the comment period until December 16 for a proposed third-party risk management guide specifically tailored for traditional community banks that are supervised by the Federal Reserve Board.